How do people view trade
Stefanie Stantcheva designed and ran two large-scale surveys of U.S. residents between 18 and 70 years of age that elicit respondents’ perceptions of trade along each of the elements in the diagram below. The first survey with 1,771 respondents took place between August and September 2019 and the second one with 2,148 respondents between November and December 2020. Her finding include:
- People’s understanding of trade and trade policy is imperfect. Answers to questions about the price or wage effects of trade are only slightly more accurate than random answers. Respondents are better at predicting the impacts of tariffs or export taxes and seem to somewhat understand the concept of comparative advantage and the existence of gains from trade.
- Respondents’ own exposure (both actual and perceived) to trade through their work is significantly correlated with their support for trade restrictions. What is more surprising is that it not only shapes their assessment of how trade affects them, but also their broader perceptions of the efficiency and distributional impacts of trade on the U.S. as a whole.
- Respondents were divided on whether trade lowers prices or increases the variety of goods in the U.S. or in their own consumption basket.
- People who believe that those hurt by trade can be helped using other tools (i.e., compensatory redistribution) do not oppose free trade, even if they are convinced that it will entail adverse distributional consequences.
Understanding of Trade
Author: Stefanie Stantcheva
From: Harvard University
Can evidence-based information influence people’s views on trade?
In this paper, Alfaro et al. attempt to understand whether information derived from research, communicated in a concise and accessible manner, can shift people’s views and preferences for trade protection. To that end, they developed a series of survey experiments, conducted annually from 2018-2021, that contained randomized information treatments providing a concise summary of evidence established by economic researchers on the gains and losses from trade. The surveys were sent to 12,000 participants in the U.S. To account for the factors that might influence people’s trade preference, the authors also collected detailed information on participants’ demographic, economic, social, political, and behavioral characteristics. They found:
[W]e find that information highlighting the link between trade and manufacturing job losses significantly raises respondents’ propensity to select limits on imports as a preferred policy; this tendency is only partially offset if respondents receive additional information describing the accompanying expansion in non-manufacturing jobs. Strikingly (and rather paradoxically), information on the benefits of trade for goods prices also induces protectionist policy choices. Our exploration of underlying mechanisms shows that the treatment effects are not driven by the economic self-interest of respondents or a lack of persuasiveness. Instead, the information appears to reinforce respondents’ priors stemming from their political identity and concerns regarding China, while also eliciting loss-averse behavior.
Can Evidence-Based Information Shift Preferences Towards Trade Policy?
Authors: Laura Alfaro, Maggie X. Chen, Davin Chor
From: Harvard University, George Washington University, Dartmouth College
